After contacting a business broker Orange County, the first thing he will recommend is for you to get a business valuation report. A business valuation is crucial when selling or buying a business. It is a report that will help you know how much a business is really worth. The report can also be used to identify the strengths and weaknesses of a business. It is only with a valuation report that you will be able to set a fair selling price. But what is really considered in a business valuation?
From its humble beginning, your business has come a long way. It has evolved over the years. During a valuation, your business brokers Orange County will want to see how your business has been performing in the last three to five years. This helps determine if the business is failing or thriving. You will need to provide documents of your business’ origins, journey, goals and financial records.
It is much harder to sell a business that is dependent on the business owner. Buyers are interested in independent businesses. This is why during a valuation you will need to provide information about your business. Potential buyers will need information on the job descriptions of your employees. The big question that needs to be answered here is this; can the business thrive without the owner? You also need to identify key employees and also provide information on leave entitlements.
Legal and commercial information
A business valuation is not complete without considering commercial contracts, licenses, lease agreements, permits as well as registrations. The legal and commercial information will impact the overall value of your business. It is imperative that you provide proof that your business complies with the relevant health, safety and environmental laws. You also need to disclose your current and pending legal proceedings.
Profit margins, asset market value, annual turnovers and assessment of the tangible assets fall under financial information. This is the most important step in a business valuation. Your business broker Orange County will need this information to know about the liabilities that your business has and if it is thriving or not.
Market information and industry conditions
Last but not least, the business broker will have to look at the outside forces. Your business is only as valuable as how much the market is willing to give. This is why timing is everything when selling. For an accurate valuation report, business brokers Orange County must consider the target market and the industry conditions.
A business valuation report is a must have even when you don’t plan on selling your business. It can help identify the strengths and weaknesses of your business. Make sure that you hire the right team for this. You also need to understand the valuation models that your valuation expert will be using.
Every business broker Orange County will recommend that you buy a franchise if you have the means. This is because a franchise offers the best security and the highest profit. All in all, this is not a decision you should rush. In this post, we will be looking at the important things you should consider before you purchase a franchise.
What do you want from the franchise?
As soon as you contact business brokers Orange County, this is without any doubt the first question they will ask. Your answer is what enables the business broker to identify the franchise that is right for you. Needless to say, people buy businesses for all manner of reasons. You might want to run a franchise as a hobby or work full time. Will the franchise be the primary source of income? Do you want to build equity? These are all questions you will have to answer. Be honest as your answers are what will help the business broker find the right business.
How much money do you want to invest?
This is another question you will have to answer before the search for a business for sale starts. Unlike small businesses, you will have to be prepared to spend quite a lot of money when buying a franchise. You also need to account for the fact that your new business will not be profitable right away. In addition to considering the purchase cost, you need to account for other expenses you will have to incur. You need to set money for equipment, inventory, working capital, franchise fee and other expenses. With your budget in hand, your business broker in Orange County will be able to narrow down to the businesses that you can afford to buy and operate.
What is your exit strategy?
You don’t plan on running the new business forever, are you? How long do you want to run the business? Your plan can be to run the business for five years or it might even be something you plan on passing down to your heirs. Answering this question is very important when purchasing a business.
These questions will help find the right franchise to invest in. The rule of thumb is never to rush into the purchase. Take the time to evaluate the pros and cons of the decision and be certain that you can comfortably run the business. Don’t forget to consider the risk that you are willing to assume.
Prior to contacting a business broker Orange County, a lot of questions go through the mind of a business owner. Most of these questions are on whether it is the best time to sell. For some business owners, selling was not the initial plan. Some wanted to run their business and pass it down to their children. However, due to challenges, selling may seem like the best way forward. If you plan on selling, you must make sure that you are selling for the right reasons and not making an impulse decision. Here are some good reasons why business owners sell.
It was always the plan
With some entrepreneurs, selling their company was always the plan. In this case, their exit strategy will include selling. If this is the reason for selling, you need to sell when your business is at its best. This is the time when business brokers Orange County will be able to help you get the best deal.
Declining performance and profits
As aforementioned, it is always good to sell when your business is doing well. This is why for some people; they consider selling when the performance and profits of their business start to plummet. In this case, the longer you wait to sell the less money you will make in the sale. If there is no way of turning things around, you can simply sell. This is a decision made when the new competitive threats proves it is unlikely for the business to recover.
No longer enjoy running the business
When starting up, it can be fun to run a business. This is mostly because you have control over everything. However, as the business grows, you tend to lose the control. You have to hire teams to help with business management. This may cause you to be detached and no longer enjoy running the business. If you no longer have the motivation, selling the business could be a great idea. You just need to contact a business broker Orange County to help prepare for your exit.
It has outgrown your skills
This is a tough thing to face. When you can no longer run the business because you lack the skills, selling could be a viable option. That is more so if you no longer enjoy running the business.
Threats on in the future
Threats on the horizon can also cause you to sell. If you predict that the new regulations or changes in your industry will drown your business, selling now can help avoid huge losses.
Last but not least, you can sell your business because you have other lucrative opportunities to pursue. You can then use the money from the sale to finance your new venture.
One of the duties of a business broker Orange County is to help you with the paperwork. In the sale or purchase of a business, you will come across several contracts. Making sure you understand each of these contracts is the key to avoiding trouble down the road. In this article we shall be taking a quick look at the main contracts you need to be familiar with as a business buyer or seller.
Contracts with advisers
There are several contracts you will need to sign. The first will be a contract with the financial adviser for the tax and finance advice. You will also need to sign a contract with a solicitor for legal advice. Another contract you will not be able to avoid is that with the business brokers Orange County. Prior to signing any of these contracts, it is imperative that you read and understand every term and condition. Don’t be afraid to negotiate the terms in the contract. Needless to say, you should only sign a contract with a professional that you have confidence in.
The purpose of this contract is to ensure that business secrets don’t get in the wrong hands. This contract is mostly drawn up by a business broker and has to be signed by a potential buyer before being shown the sales memorandum. The contract is also referred to as the non-disclosure agreement.
This is the document that introduces a buyer to the business he is interested in buying. This document includes vital information about the business. The important details you will find include the following:
- Business sector
- Duration the business has been trading
- Main financial details such as profit, total debt, cash flow and asset value
- Structure of the sale. Are you selling the whole business or part of it?
- Number, age, job description, length of service and salaries of the staff
- Location of the business premises, leasehold, rent and rates
The purchase orders have to be made in writing. After giving an initial verbal offer, a buyer must then provide a letter that sets out the main details. The offer given should be subject to contract. A good offer will include the following:
- What the buyer is offering to buy
- Offer price and the payment terms
- Information required by the buyer prior to making the offer.
The four are the main contracts you will have to sign when selling or buying a business. The best news is that business brokers Orange County will help with all the paperwork. You also need to involve your lawyer in order to confirm if the contracts are legally binding.
Finding a business broker Orange County is quite easy. With a simple Internet search, you will find the contacts of dozens of promising firms in your area. The problem, however, is that not every business broker you contact will have your best interest at heart. Some are out to make money at your expense. Additionally, how well you relate with the business broker will determine the level of success you achieve. It is for this reason that we have covered crucial tips you need to use to find the best firm and get the best services from a broker.
Find someone that has your best interests at heart
The first thing you need to do when hiring business brokers Orange County is to ensure that they are serving your interests and not those of buyers. A broker that is serving your interests will do everything within his power to facilitate the deal and to help you achieve the highest possible sales price. He should also be able to build your confidence on the first meeting.
While meeting with a business broker, you should be wary of brokers that require you to give them money up-front for any service including business valuation. If money is required, know why they need the money. How will they be using that money? Most firms that ask for money upfront for business valuation tend to be focused on selling their valuation service and not helping you sell your business.
Create a healthy relationship with the broker
As aforementioned, the type of relationship you have with a business broker will affect the success of the sale. You want someone you can trust. If you are not comfortable giving vital information about your business to the broker, chances are the broker will not have everything he needs to sell your business the right way. Only hire someone you feel comfortable to speak honestly with and someone that will speak openly and honestly with you. One way of building trust in a business broker is looking at his track record and professional credentials. IBBA membership, CBI attainment and designation awarded by the IBBA will help you learn more about the broker. Hire a business broker Orange County that has met professional standards.
Ensure the broker is interested in learning about your business
When you contact a business broker, the last thing you want is for him to give you an offer without even taking a look at your business. Learning more about your business is the foundation for developing a proper marketing strategy. A prospective broker must show interest in learning about the mechanics of your business before developing a marketing strategy.
Ensure they have a good relationship with other professionals
Last but not least, you need to make sure the business brokers Orange County that you are considering have a good relationship with accountants, law firms, bankers and other relevant professionals. This shows they have the connections you need to sell fast.
Hiring a business broker Orange County is obviously the first thing you should do when planning to buy a business. Often times, buyers assume that only business owners can benefit from the services of a business broker. You will be surprised to know that buyers can also hire a broker. Even so, understanding how to handle the negotiations the right way is something you need to do long before you hire a broker. Here are some important things you must always do.
Know the market
The first step is definitely to vet the market. You cannot negotiate properly if you don’t know what you are up against. The method of negotiation that you use will depend on the type of business you want to purchase. if it is a business in the industrial services and materials, negotiations need to be based on market fluctuations. You can learn more about the market by studying the trade publications, attending networking events and also by talking to business brokers Orange County that are experienced in the industry you wish to invest in.
Hire a business broker
One thing you must never avoid is the hiring of a business broker. Business brokers are involved in the sale and purchase of businesses on a daily basis. They have more professional connections and experience than you. It makes more sense to leave the negotiations to a business broker. The last thing you want is to make mistakes that expose your hand. A business broker will remain objective throughout the negotiations.
Leave room for negotiations
Another very important thing you will have to do is to always leave room for re-negotiations. A common mistake that buyers make is that of giving an offer without leaving room for negotiations. They lock any chance of getting a counter offer. In this case, the business owner ends up considering other buyers. Even with a solid business valuation report, it is imperative that you always leave room for negotiations. Good business brokers Orange County will always ensure that they leave doors open for counteroffers.
Last but not least, to show a business owner that you are serious about purchasing his business, you need to secure financing. Get pre-qualified for a loan before you start the negotiations. Showing the seller that you have the means to pay for the business will give you a better edge during negotiations.
As simple as negotiations might seem, it is paramount that you always leave the work to an experienced business broker Orange County. The smallest mistakes during negotiations can cost you a lot.
It is not uncommon for a business broker Orange County to recommend buyer financing. This is the option in which the seller of a business agrees to give the buyer a loan that enables the buyer to easily purchase the business. This is not essentially a loan but rather an option that allows a buyer to pay a down payment and settle the remaining balance over a period of time. When done correctly, seller financing benefits both the buyer and the seller. But should you consider it?
When does it make sense?
Securing a loan that is needed to buy a business can be hard more so when the buyer has a bad credit or lacks a good security. In this case, the seller of the business can agree to favorable terms where he allows the buyer to pay for the business over an agreed period of time. To benefit, the seller can either impose a higher interest rate or set the price of the business a bit higher. Business brokers Orange County recommend this option because it enables a buyer to get financing easily and allows the seller to sell fast and make profit.
What the seller expects
Apart from cashing out, the seller wants to be sure that their business will be in the right hands. As a result, they are very picky on the buyer they sell to. A seller will want a buyer who has significant experience in the industry, a buyer with a solid business plan, and a buyer with great working capital and roots in the community. The seller knows that if the business fails before the buyer clears the payments the seller will incur a loss. The interests of the seller are thus tied to the success of the business.
Business sellers treat the loans as seriously as the banks do. They will require a credit check, ask for collateral and also request for life insurance. This is very important when you consider that the loan terms can extend for 10 years.
How to vet the deal
As a buyer, it is not enough for you to grill the business owner. You need to scour the financials right from bank statements to cash flow and tax returns. You also need to inspect the business to make sure all the inventory, equipment as well as assets are well accounted for. The best thing is that a good business broker Orange County can help with this.
What to negotiate
Buyers can negotiate the terms given by the seller. Typically, a seller will lend you between 5 and 15 percent of the selling price. This does not, however, mean that you cannot get 90% seller financing. You can also negotiate the terms on loan repayments and interest rates.
A business broker Orange County can make it easy for you to sell your business and the land it sits on. Even so, you still need to plan properly so as to sell each successfully. In this post, we shall be taking a look at the important things you will have to do.
Selling a business is a complicated proposition for the majority of owner. The sale is even more complicated when it includes commercial real estate. Even with the best business brokers Orange County by your side, you need to make sure that everything is well organized and planned pre-sale. Doing so will help negate any buyer concerns and also get the highest possible offers. Here are the most important things you need to consider when getting ready for the sale.
Determine if you should sell together or apart
The most important decision you will need to make is whether to sell together or separately. The decision you make will have a significant affect the asking price and the type of buyers that you attract. It is harder to find a buyer that is interested in both your business and the real estate. It is also hard to find a buyer that will want the real estate and allow a business to continue operating on it. Selling together or separately has its share of pros and cons. A good business broker Orange County will advise you accordingly.
Enhance the facilities
Whether you want to sell the commercial real estate or the business, first impressions will matter a lot. As you get ready to sell, you need to take the time needed to improve curb appeal. The inside and outside of the business must reflect the same care that you put into the building. Simple things like cleaning, landscaping and adding a fresh coat of paint will do wonders. When the first impression is great, you will be able to attract more buyers.
Price it right
The first thing you will have to do as soon as you hire business brokers Orange County is to get a business valuation report. The valuation report will help you know exactly how much your business and the real estate is really worth. Your business broker will then use the market trends to help set the right price. Overpricing your business will only kill chances of attracting more buyers. Setting the right price will create maximum demand which enables you to command higher prices.
With that out of the way, the next thing you need to do is to get the word out. Your business broker will again help with that. You should also be willing to offer seller financing.
Hiring a business broker Orange County is among the first things you need to do when getting ready to sell your business. This is because a business broker has sold many businesses before and will be more equipped to navigate challenges that might get in the way. Still on your part, you need to get your business ready for sale. In this post, we shall be looking at the top things you need to do when getting ready to sell your business.
Know its worth
To price it correctly and sell it profitably, you need to know precisely how much your business is worth. This means the first thing you should invest in is a business valuation. You can hire an independent business appraiser or ask your business brokers Orange County to help with the valuation. There are many methods used in a business appraisal. You should, however, note that most buyers will want to do an appraisal of their own. Giving false information in an appraisal will cause you to lose a serious buyer.
Pick the best time to sell
When it comes to real estate, location is everything. In the sale of businesses, timing is everything. Selling often becomes an option when a business is staring down legal challenges, bankruptcy, or bleeding money. In these cases, selling for a huge profit will be close to impossible. However, if selling is your exit strategy, you have to pick the perfect time to sell. The perfect time to sell is when the business is doing well. A business that is doing great is enormously appealing to investors. The better your business is making money the higher you will be able to sell it for. Investors also love businesses that can run smoothly in your absence. One of the things you will need to do when planning to sell is to make sure there is a sound management team that can run the business smoothly in your absence.
Fix your reputation
Has your business earned a bad reputation in the past? Now is the time to fix the bad reputation. Remember that buyers will Google your business. Start with online reputation management. Your business must also have social accounts.
Fix your weaknesses
Last but not least, you will need to identify your weaknesses and fix them. The key to selling fast and profitably is to promote your selling points. Buyers will always use your weaknesses to negotiate. Prior to listing your business for sale, you need to fix most of your business’ drawbacks. A good business broker Orange County will help identify these weaknesses and give you advice on how to fix them.
Working with a business broker Orange County offers five key benefits. These benefits can be classified as the five Cs; confidentiality, continuity, coverage, cash value, and closing. Understanding these benefits clearly is the key to understanding the real benefits of working with a business broker.
When you go into the sale of your business, you will be faced by an immediate difficult quandary on how to keep the sale a secret. One thing you need to understand is that when word gets out that you are selling your business, a number of negative things will follow. Employees, clients, suppliers, lenders and other important people will leave and this will cause the value of your business to decline. The main duty of business brokers Orange County is to ensure that word never gets out. For starters, a business broker is not directly linked to your business. Second, he will provide a foolproof confidentiality agreement that potential buyers have to sign before they can be shown into your business. Third, a business broker knows how to market a business effectively without disclosing its identity.
Even when selling a business, you still need to keep running it optimally. Putting operations on hold will only cause the value of your business to nosedive. Running your business while still selling it can be hard. This is more so when you consider the amount of work that needs to be done when selling and when running the business. This is where the business broker Orange County comes in. He will take over the sale part so that you can focus on the core operations of your business.
When you partner with a business broker, you will be able to benefit from maximum coverage. Selling businesses is the full-time job of a business broker. He will give your business the attention it needs to sell fast and profitably. The broker also has vested interests because the more money he sells your business for the more money he gets paid. In addition to that, the sooner he sells the sooner he gets paid.
Business brokers Orange County will market your business to the largest buyer pool. This means you will get multiple offers which in turn will give you a maximum value in the return for your business. A business broker will portray and highlight your business in order to capture the interest of buyers. His experience in selling businesses also enables him to help you get the best value.
Last but not least, the business broker will help close fast and profitably. The main function of a business broker is to facilitate and close on the sale. Brokers are well aware of potential roadblocks and factors that can lead to delays.
Working with a business broker Orange County will help you sell fast and get the best value for your business. You just need to find a broker that has a good reputation and experience selling businesses that are similar to yours.